Saigon apartment prices jump as licenses dry up
Condominium prices in Ho Chi Minh City rose by 10 percent a year between 2014 and 2018, Savills estimates.
A recent report by the real estate market research firm said in the period the number of transactions increased by 44 percent a year, peaking in 2018 with over 49,000. At the end of the period the average price was $1,600 per square meter.
Grade A (high-end segment) experienced the highest price rise, while grades B (mid-priced) and C (affordable) grew at a slower pace.
The absorption rate also hit the highest ever rate of 87 percent, with growth being particularly evident in grade C, which accounted for 60 percent of all transactions in the 5-year period.
Grade C is dominated by occupiers/end-users while grade B attracts upgraders and buy-to-let investors and grade A buyers are mainly long-term investors. Savills expects the majority of stock to be grade C until 2020.
A survey by VnExpress has found that the supply of affordable housing is gradually declining across the city as a result of authorities licensing few housing projects in 2018-2020.
According to the housing development plan for 2016-2020 with orientation until 2025, that was approved by the HCMC People’s Committee last November, the city will not approve construction of new high-rise apartments in inner city areas (District 1 and 3) until 2020.
This scarcity has sent apartment prices in both the primary and secondary markets surging, and as a result cheap housing projects are being moved to neighboring provinces like Binh Duong, Dong Nai and Long An.
Real estate services firm CBRE in a report on the first quarter said the average price in the primary market increased by 3.1 percent quarter-on-quarter and 14.9 percent year-on-year.